Need advice on whether to sell my flat...

[weeredcar]

Hi,

Would appreciate some advice on this. I own a 1 bedroom flat - its currently rented out after I moved in with my DP a year ago. I have been slowly doing it up (new windows, decoration etc).

I am not making any profit on renting it out (after mortgage and additional tax in the income) and really am wondering whether to sell it off.

The housing market in my area is very good at the moment and I think I could sell it for more than I bought it for (which was maybe too much - bought it 3.5 years ago). If I sold it for the same price, then I could wipe out all of my debts and be completely debt free. This would also free up almost £1k/month (equivalent of mortgage/debt repayments).

The housing bubble in my city has to burst at some point and I'm really swithering about selling whilst the market is good. I would be able to save a chunk of money each month in order to have savings, and potentially buy another property in the future.

My tenants are on a one month rolling contract (they have already been in for their minimum six months) and ideally I would want them out before I marketed the flat - I would be wanting to 'stage' the flat for selling. They are tidy enough but I feel the flat would have to be spot on in order to get as much as I could for it.

So, what would you do - leave the tenants in it and put it on the market, give the tenants notice and get the flat spotless (but empty and potentially not giving any revenue for a few months) or not sell and carry on renting it out.

So many questions.......thanks for reading :)

I can see the dilemna. Personally I probably wouldn't sell. I have a flat on which I make no profit, probably a grand or two loss each year. But I like having it there as some form of security. Without being pessimistic, you've only been with your partner a year and it is always good to have somewhere to retreat to should things not work out.

If your area has good prices now, even in these hard times, I think they will only continue to improve in the short to mid term. We are now coming out the worst of the double dip and I don't think there will be another bubble soon. I would keep paying off the mortgage as you are (interest and repayment if you can) and then in a couple of years if you need a deposit to buy a place with dp you can sell and use the profit.

how long could you afford it to be empty for ?

I have been with my partner for 4.5 years - I know what you mean BonaDea with regard to keeping it in case things go wrong, but I would then use my nest egg as a deposit for another place if needs be.

I could afford to keep it empty for as long as it takes LIZS - that (luckily) isn't an issue.

No advice as such, but you should be aware that legally you have to give your tenant's 2 months notice in writing, not 1. And it should be 2 months from the date their rent is paid. They have a periodic tenancy if their 6 month fixed term has come to an end and ifthey haven't signed another agreement. So many landlords don't know how to serve a correct notice but it's really important to get it right.
The tenant's only need to give you 1 months notice if they want to leave.

Well, what is interest rate on the debts you would wipe out- sounds like 1k a month? How does that compare with the equity you are creating by renting out the flat each month? If you are creating more equity in the house than the interest payments you would be getting rid of wiping out your debt, then financially you are better of keeping the flat. If not, then sell your flat and paydown your debt. Interest rates are incredibly low (both on savings and debt) so before you cash in, its always worth looking at the maths. Unless you need the equity in the house to do something specific in the short-term I wouldn't worry about the movements in the housing market as no one knows exactly what will happen or when.

My interest charges on my debts aren't high - I have a loan and the rest are on credit cards with 0% interest. It will take me 3 years to pay everything off if I keep paying what I am at the moment (£500/month). My mortgage is £500/month.

I also need to carry out some work in the flat - kitchen and bathroom both need replacing although they are sufficient at the moment. I also need to replace a window and the internal doors. This would cost around £7.5k in total.

I have also installed central heating before I let out the flat so that cost me £2.5k.

I perhaps am guilty of not detaching myself from it as it was my home for 3 years - its not perfect but I'll never have any issues renting it out (great area for industrial estates etc).